Accounting for the Effects of Employment, Equity, and Risk Aversion in Cost–Benefit Analysis: An Application to an Adaptation Project

Abstract This paper sets out to explore what extent integrating employment effects, equity, and risk aversion within cost–benefit analysis (CBA) affect the economic appraisal of a climate change adaptation project designed protect against flood in region Bilbao (Basque Country, Spain). Four CBAs are conducted: (i) standard CBA; (ii) CBA considering equity; (iii) equity employment; (iv) aversion. All conducted using time frame 2014–2080 100-year return period under middle road emission scenario (RCP4.5). A sensitivity is also undertaken. Results suggest that efficiency investment contingent on types considerations included CBA. Integrating elements employment, can strengthen or weaken case for action (leading higher lower net-present values) (depending discount rate chosen) may even be deciding factor determining whether particular should carried not (whether value positive negative).